In the grand scheme of things three and a half years may be but the blink of an eye, but for New Yorkers who walk by the hole at ground zero every day, it has been far too long a wait for a deal resolving the fate of the site. News that such a deal may require spending $6 billion in public funds on digging a tunnel from New Jersey to Midtown Manhattan, as our David Lombino reports today, only underscores how frustrating the whole matter has been to New Yorkers. Just consider what has transpired since terrorists felled the World Trade Center.

Congress provided $8 billion in Liberty Bonds, giving developers the opportunity to finance redevelopment projects with triple-tax-exempt debt. It was left to the governor and the mayor to find ways to divvy up the bonds, which they happily did, although not necessarily for projects in keeping with what American taxpayers had in mind. For example, the developer of Bank of America’s new building at Bryant Park, on 42nd Street, benefited from $650 million of Liberty Bond financing for a project that was neither damaged during the September 11 attacks nor even in Lower Manhattan.

Meantime, Goldman Sachs, which didn’t deign to move to ground zero itself but whose $38-million-a-year chief executive was willing to build nearby, managed to extract from the city and state $1.6 billion of Liberty Bond financing. Federal downtown rebuilding money has been sprinkled on the National Museum of the American Indian, which is at Bowling Green and received $1.5 million, according to yesterday’s New York Times, and the Tenement Museum on the Lower East Side, which is getting $1 million. The South Ferry subway station is being rebuilt at a cost of $450 million in public funds, though it was hardly damaged by the September 11 attacks.

Meanwhile, those organizing the memorial to those killed at ground zero are being asked to resort to private fundraising. It’s a scandal – downtown rebuilding money for Bank of America, Goldman Sachs, the Museum of the American Indian, and the South Ferry subway station, but Larry Silverstein, who bought a 99-year lease to the trade center site fair and square, is being forced to practically beg for rebuilding money he needs, and the families of victims are being asked to raise money privately for a memorial.

This story is more about the dangers of throwing around large quantities of federal tax dollars than about anything else. The availability of so much “free” money – at least free to the politicians themselves, although certainly not to the taxpayers who elect them – has distorted and delayed the debate over ground zero. That debate, in turn, has led to a delay of years, not months, in redeveloping ground zero itself. Mr. Silverstein likes to note that while ground zero has been mired in bureaucratic strife, he is ready to sign leases on 7 World Trade Center, a site across the street that was also destroyed but that the private sector, in the person of Mr. Silverstein, has already succeeded in building. Yet Mr. Silverstein’s is not the only private-sector vision for Lower Manhattan; private developers are already realizing the mayor’s dream of a 24/7 residential neighborhood around Lower Manhattan by converting obsolete office space into apartments.

An ordinary marketplace would allow many competing visionaries to bring their dreams to life and over time individual people and firms would choose their preferences. At ground zero, alas, this has not happened. A combination of factors, from the Port Authority’s ownership of the site to the role of Liberty Bond financing in redevelopment to the emotional stakes, have hindered building on the site for three and a half years. With luck, New Yorkers may be near the end now and the cranes will start going up soon. The lesson, however, will remain. Far from making things better, the government succeeded in showing how to waste money.